Councils urged to use £2.5 billion in surplus assets more wisely
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The Audit Commission is calling on the country's local authorities to make the best of an estimated £2.5 billion in surplus assets.
In 2012/13, the local government estate was worth an estimated £169.8bn. Although the value of the estate has shrunk by nearly a third since 2004/05, the Audit Commission is highlighting that within it are around £2.5 billion of ‘surplus’ assets.
The commission says that councils should ensure they have a strategic approach to managing their surplus assets in order to get the best value for money they can.
The International Financial Reporting Standards, fully implemented in 2010/11, required local authorities to account separately for some property assets as ‘surplus’.
Although ‘surplus’ property is treated as ‘operational’ in the accounts, councils do not use it to provide or support services.
Nor is it ‘non-operational’; for example, held as an investment to generate rental income. It is also not likely to be sold in the coming year, as such assets are classified as ‘assets held for sale’.
’Surplus’ assets are potentially worth nearly five times that of ‘assets held for sale’ which, in 2012/13 were valued at £500 million NBV.
The commission's chairman, Jeremy Newman, said: "To be clear, we are neither advocating that local government starts a wholesale sell-off of their land and property nor are we suggesting councils shouldn’t spend money on buying assets or on investment to improve their existing property.
"What we are highlighting is a group of assets that do not provide immediate benefit to local communities, but still require councils to spend money on maintaining them. These assets have potential value for councils. While not all such land or buildings may be sellable, councils should consider how much value they gain from surplus assets and how this could be increased.
"I urge councils to use the data held in the Commission’s ‘Value for Money (VFM) Profiles Tool’, such as spending on and value of land and property assets and ‘surplus’ assets, alongside their unique and detailed local knowledge, to regularly review if their estate is fit-for-purpose."